by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
In 2017, a majority of North Carolinians who purchase health insurance on their own will have no choice but to pay their premiums to either Blue Cross and Blue Shield, Blue Cross and Blue Shield, or Blue Cross and Blue Shield. The pickings aren’t slim in just North Carolina. For anyone remotely following the unraveling of Obamacare, dwindling insurance options has been quite the national issue.
When the federal health law’s Exchanges went live in January 2014, North Carolina started with two carriers brave enough to enter into uncharted territory. For the first time, they were required to accept every applicant in the non-group market, regardless of health status. They also agreed to subject themselves to limitations on pricing premiums based on policyholders’ actual risk. As predicted by many experts in the field, the deadly combination of the federal government having a larger hand in insurance regulations combined with a weak individual mandate has produced all sorts of unintended consequences. Not enough low-risk people are signing up for health plans in the individual market (just 27% of the 600,000 enrollees in North Carolina are between ages 18-34), claims costs are outweighing premium revenues, and temporary funding streams provided to insurers by the government that are set to expire in 2017 haven’t really helped suppress their volatility.
The impacts of these unintended consequences are causing a huge disruption in the non-group insurance market. United is withdrawing from offering plans in 77 of the state’s 100 counties. Last week, Aetna officially announced its exodus, citing losses of $400 million nationwide on Obamacare customers within the first two quarters of 2016. The decision to narrow its Obamacare market presence by 70 percent deals another blow to the state, since this means no more Aetna plans to be offered in 39 counties.
That leaves 80 percent of enrollees, or 480,000 residents across the state, with just one insurance option – Blue Cross and Blue Shield. Cigna has decided to enter into North Carolina’s Exchange, however the company plans to set up shop in just six counties within the Research Triangle Region.
The Exchange infrastructure is failing. Not only are there limited options, but health plans also are really not affordable.
Not so fast, The Department of Health and Human Services (DHHS) will say. Three out of four marketplace enrollees are eligible for subsidized plans for $75 a month. Mainstream media consistently report that 90% of North Carolinians qualify for financial assistance.
Yes, some enrollees certainly do benefit from generously subsidized health plans depending on annual household income. Those paying for others’ plans don’t. Other enrollees, despite receiving subsidies, still struggle to pay their premiums and out of pocket health care costs. And yet they are lost in the financial assistance statistic where it is presumed that, at first glance, an overwhelming majority of North Carolina non-group policyholders have access to affordable health insurance coverage.
That’s what the Obama Administration and Co. wants the public to think. After clicking around on healthcare.gov, a few examples demonstrate that Obamacare’s high-deductible, high premium health plans turn out to be a lose-lose situation for middle-income individuals and families:
Example 1: A 27-year old female living in Wake County who earns $35,000 a year qualifies for a $14 monthly subsidy. Since catastrophic plans are available for people below the age of thirty, healthcare.gov estimates the lowest cost plan available starts at $142 per month (subsidy included) in conjunction with a $6,000 deductible.
Example 2: A married couple living in Vance County with a combined household income of $70,000 doesn’t qualify for a tax credit. Their lowest cost bronze options are estimated at $564 a month for a high deductible health plan that can be paired with a health savings account (HSA). Catastrophic plans aren’t available because both spouses are over the age of 30.
Example 3: Suppose that two self-employed parents ages 36 and 34 with two young children earn a combined $100,000 a year. Family plans start out at $784 a month on top of an $11,560 deductible that applies to in-network out of pocket medical expenses only.
The cost of health insurance will likely increase even more for 2018 not just because Blue Cross and Blue Shield will be dominating the individual insurance market, but also because the company will be absorbing more high-risk policyholders who originally purchased plans from either United or Aetna. As of now, Blue Cross and Blue Shield is waiting approval by the Department of Insurance (DOI) to raise premiums by an average of 18% for 2017 plans.
How should America proceed to fix this mess? Insurance companies and Obamacare advocates want more corporate welfare. Market-minded health experts have different schools of thought on how to make health insurance – more importantly health care – more affordable while still catering to people with pre-existing conditions. Decision-making also weighs heavily on who will take over the Oval Office next year.
Proposals such as capping the tax exclusion on employer-sponsored insurance, distributing age-based universal refundable tax credits to people without access to job-based health coverage, expanding tax-preferential health savings account contributions (HSAs), funding federally-administered high-risk pools, and relaxing regulations that prohibit insurance companies from effectively pricing their risk pools would have to be executed at the federal level. In the meantime, there are few policy changes states can take on themselves to help mitigate today’s health care access issues. Eliminating Certificate of Need Laws, repealing state health coverage mandates, and expanding the scope of direct primary care are just a few examples.